By BizWatch Nigeria Policy Desk | April 9, 2026
Key Points
- Central Bank of Nigeria begins AML/CFT/CPF supervision pilot targeting selected crypto firms
- Six Virtual Asset Service Providers including Flutterwave and Paystack are part of first phase
- Pilot focuses on risk monitoring, compliance frameworks, and FATF “Travel Rule” readiness
- Participation does not confer licensing or regulatory approval status
- Move aligns Nigeria with global standards set by Financial Action Task Force
Main Story
Nigeria’s financial regulator, the Central Bank of Nigeria, has launched a targeted supervisory pilot programme aimed at strengthening oversight of cryptocurrency-related financial activities, marking a significant shift in how the country engages with digital asset operators.
The initiative, announced in an official statement dated March 31, introduces an Anti-Money Laundering, Counter-Financing of Terrorism, and Counter-Proliferation Financing (AML/CFT/CPF) supervision pilot involving a select group of Virtual Asset Service Providers (VASPs). These include firms such as Flutterwave, Paystack, KuCoin, and others operating within Nigeria’s evolving fintech ecosystem.
According to the apex bank, the pilot is designed as a risk-based supervisory engagement rather than a regulatory overhaul. It seeks to deepen institutional understanding of how crypto platforms operate, the risks they pose, and the compliance mechanisms required to safeguard Nigeria’s financial system.
“The Pilot is designed to develop a structured understanding of AML/CFT/CPF risks, business models, and operational practices across participating entities,” the CBN stated.
Participants in the programme are required to submit monthly compliance metrics, undergo detailed reviews of their operational processes—including customer onboarding and transaction monitoring—and demonstrate preparedness for international compliance standards such as the Financial Action Task Force’s Travel Rule.
Importantly, the CBN clarified that participation in the pilot does not imply regulatory approval or licensing, reinforcing the distinction between supervisory engagement and formal authorization within Nigeria’s still-evolving crypto regulatory framework.
The Issues
1. Regulatory Fragmentation in Nigeria’s Crypto Space
Nigeria’s approach to cryptocurrency regulation has historically been fragmented, with overlapping mandates between the Central Bank of Nigeria and the Securities and Exchange Commission (SEC). While the CBN focuses on financial system stability and banking oversight, the SEC has positioned digital assets as securities in certain contexts. This pilot suggests a more coordinated attempt to address regulatory blind spots without immediately consolidating authority.
2. Rising Financial Crime Risks in Digital Assets
Globally, regulators have raised concerns about the use of cryptocurrencies in illicit financial flows, including money laundering and terrorism financing. Nigeria, with one of the highest rates of crypto adoption in Africa, faces heightened exposure. The pilot reflects an acknowledgment that traditional monitoring tools are insufficient for decentralized financial systems.
3. Compliance Burden on Fintech Innovation
While the initiative aims to strengthen oversight, it also introduces compliance complexities for fintech firms. Requirements such as sanctions screening, cross-border monitoring, and Travel Rule implementation demand significant technological investment, potentially raising barriers for smaller operators.
4. Alignment with Global Standards
The involvement of Financial Action Task Force standards—particularly Recommendations 15 and 16—signals Nigeria’s intent to align with international best practices. This is critical for maintaining correspondent banking relationships and avoiding grey-listing risks in global financial systems.
What’s Being Said
The Central Bank of Nigeria has positioned the pilot as a collaborative and exploratory exercise rather than an enforcement action.
“Participation in the Pilot reflects a formal supervisory invitation to engage with the CBN in a controlled and structured environment,” the Bank noted in its statement.
Industry observers have broadly interpreted the move as a pragmatic step toward regulatory clarity. Many fintech operators have long called for clearer engagement channels with regulators, particularly as Nigeria remains one of the world’s most active crypto markets.
From a global perspective, the Financial Action Task Force has consistently emphasized the importance of enforcing the Travel Rule, which requires virtual asset providers to share transaction information to prevent illicit activity. In its guidance, the FATF has stressed that countries must ensure that virtual asset service providers are subject to the same level of scrutiny as traditional financial institutions.
Meanwhile, Nigeria’s Securities and Exchange Commission has previously indicated that digital asset platforms must operate within a defined regulatory perimeter, signaling a broader policy direction toward formalization rather than prohibition.
What’s Next
- The pilot will proceed in multiple phases, with additional VASPs already scheduled for future supervisory engagement
- Participating firms are expected to submit monthly compliance reports and undergo continuous regulatory review
- Nigeria’s broader crypto regulatory framework may evolve based on insights generated from the pilot programme
- Coordination between the CBN, SEC, and Nigeria Financial Intelligence Unit (NFIU) is likely to deepen as oversight expands
Bottom Line
The Bottom Line: The CBN’s AML supervision pilot marks a strategic pivot from restriction to controlled engagement with Nigeria’s crypto sector. Rather than banning or fully liberalizing digital assets, the regulator is building a data-driven foundation for oversight—one that could ultimately determine how crypto integrates into Nigeria’s formal financial system.
